Understanding Financial Risk and Risk Mitigation

Name: Understanding Financial Risk and Risk Mitigation
Author: Robert Villanueva

Learn how financial risk is mitigated

Preview the first lesson free — get full access to all 2 lessons.

Course: On-Demand

(bright music) Risk is ever present in finance, so it's important for the communications professional to understand what's involved. Let's go over the various types of risks as well as how you can mitigate risk by adhering to corporate governance standards and regulatory compliance. All companies operate with varying degrees of financial risk, meaning they can accept a certain amount of exposure and the consequences associated with particular risks to pursue market and revenue opportunities. No matter the business or industry, there is always financial risk. Communications professionals must understand financial risks so they can provide strategic counsel to company leaders in mitigating risk, develop a communications plan and apply it during a crisis, and respond intelligently to media and stakeholder inquiries. There are many types of risks the companies are exposed to in their day-to-day operations. Here are some of the more common ones that financial communications professionals must manage. Competitive risk. When competitor companies increase market share, lower prices, or engage in other tactics to sway customers away from a company. Economic risk. When macro economic conditions affect an investment. Environmental risk. When a company negatively impacts a community, Investment risk. When a company makes high-risk financial decisions with investments. Legal risk. Areas of liability or a company's accountability for claims against the firm. Operational risk. The hazards faced by companies involved in certain industries such as those with a high degree of human interaction. Personal risk. Complaints, on-the-job injury, union strikes, layoffs and more. Political risk. When government policy adversely impacts a company or its industry. Regulatory risk. When a company is affected by changing laws and regulations. And reputational risk. When company employees do something to damage its public image. In turn, risk mitigation is what a company does to strategize the many what if scenarios that could happen to the company. Then, implement strategies designed to reduce their severity or the chance of them happening altogether. Financial communications professionals support risk mitigation efforts through practice areas such as communications planning, employee communications, crisis communications, investor relations, public relations, media relations, and government relations. Companies employ these methodologies to understand and mitigate risk by identifying as many risks scenarios as possible, measuring their potential for financial impact on the company, assigning an individual or team to address each issue, bringing in outside independent subject matter experts, developing risk mitigation and business continuity plans, and maintaining open channels of communication with stakeholders.

Beginner Provider : Robert Villanueva 2 Lessons · 8m in Arabic, German, English, Spanish, French, Portuguese, Chinese

Course Description

This module explores financial risk, which all companies (regardless of industry or market) assume while doing business. It provides a basic understanding of financial risk. It then shows how financial risk may be mitigated and how to respond to stakeholders when financial risk turns into financial crisis.

What You'll Learn

Identify the types of financial risk that impact companies across industries and markets
Apply the steps and processes companies use to mitigate risk internally
Recognize areas of corporate governance and regulatory compliance
Identify the government and independent organizations responsible for oversight
Explain how communications professionals support risk mitigation
Respond to stakeholders when financial risk turns into financial crisis

Key Takeaways

All companies, regardless of industry or market, assume financial risk while doing business.
Companies take internal steps and processes to mitigate financial risk.
Government and independent organizations are responsible for oversight of financial risk.
Communications professionals play a role in supporting risk mitigation and responding to stakeholders during a financial crisis.
Corporate governance and regulatory compliance are core areas covered in understanding financial risk.

Frequently Asked Questions

What does this course cover?

This module provides a basic understanding of financial risk, how it can be mitigated, and how to respond to stakeholders when financial risk turns into a financial crisis. It includes lessons on Risk and on Corporate Governance and Regulatory Compliance.

Who assumes financial risk according to this course?

The course explains that all companies, regardless of industry or market, assume financial risk while doing business.

What will I be able to identify after taking this course?

You will be able to identify the types of financial risk that impact companies, the internal steps and processes companies take to mitigate risk, and the government and independent organizations responsible for oversight.

How does this course relate to communications professionals?

The course teaches how communications professionals support risk mitigation and how to respond to stakeholders when financial risk becomes a financial crisis.